Promoting democracy worldwide can sometimes be a messy business.
That's what investigators from the General Accounting Office
learned when they took a good look at the books of the National
Endowment for Democracy. The N.E.D., a foundation created and funded by
Congress ostensibly to strengthen democratic institutions around the
globe, has since 1984 handed out $152 million in grants to foreign
political groups, often with a neoconservative twist [see Corn, `Foreign
Aid for the Right:' December 18, 1989]. The G.A.0. concluded that
the N.E.D. has failed to monitor its programs closely and that many of
its recipients have not properly managed their finances. Of the
thirty-six N.E.D. projects investigated-which together absorbed $20
million-only one had been evaluated adequately.

Given the absence of strict monitoring, it was not surprising that
the G.A.0. discovered many cases of misused funds. Sometimes expense
accounts were not accurately kept. One group applied 10,000 in grant
money toward office renovation without obtaining approval. Another lent
N.E.D. funds to an employee. It also rented a car for someone who was
later arrested for drug dealing, and then it spent $1,500 in N.E.D.
moneys to cover the rental fees for the impounded vehicle. This is petty
graft. More troubling was what the G.A.0. saw-or didn't see-in
Portugal. The case involved the General Workers Union of Portugal and a
$2.6 million contribution administered through the Free Trade Union
Institute, a foreign policy arm of the A.F.L.-C.I.O., which manages at
least 40 percent of the N.E.D.'S grants. After the institute had
not done an audit, G.A.0. investigators went to check on how the money
had been spent. But the local labor union officials were uncooperative.
The G.A.0. asked F.T.U.I. to assist, but the institute was not able to
persuade its Portuguese comrades-in-democracy to supply financial
records to the watchdogs of Congress.

In a response to the report, the N.E.D. notes that the groups it
supports are mostly small activist organizations working under trying
circumstances. But some of its recipients are clearly learning one vital
lesson of U.S.-style democracy: Taxpayer dollars dispensed in an
atmosphere of lax oversight are funds just waiting to be burned.

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